Microinsurance serves as a financial tool to assist low-income entrepreneurs mitigate risks while protecting them from financial emergencies that threaten their incomes.
Currently, each country has its unique definition for what constitutes a low-income entrepreneur and a low-premium insurance product. It's recommended that definitions for what constitute microinsurance services be defined at the regional, not country level.This will allow for greater collaboration in how this financial service is designed and delivered to markets ensuring better regulation and a reduction in administrative fees. With effective use, microinsurance can help Micro-Small and Medium Enterprises (MSMEs) to become more resilient against economic shocks and generate increased investments in these vulnerable businesses.
Image sources: Multilateral Investment Fund Member of the IDB Group, GIZ - Deutsche Gesellschaft für Internationale Zusammenarbeit
A 2007 study conducted by the MicroInsurance Centre estimated that the total number of lives covered by microinsurance services in the Americas, Africa and Asia exceeded 78.5 million. The products were classified as the following: Life, Health, Accident & Disability, Property & Index.
The total number of individuals insured in the region is more than 50 million with life insurance being the most popular product. A 2013 study found that there were 94 providers from 21 of the 32 countries assessed that reported microinsurance activity. The volume of coverage by product type is more than the total covered lives meaning that many people are protected against more than one type of risk.
Source: The Landscape of Microinsurance in Latin America & the Caribbean by Micrinsurance Network, MunichRe Foundation, Microinsurance Centre (2015 - ISBN 978-99959-936-1-0)Data for this visual comes from an interactive map designed to showcase the MicroInsurance Centre's landscape studies. It appears that the southern Africa region has the highest percentage of the population covered by microinsurance. Within this region, South Africa has the highest coverage ratio of around 60%. Central Africa has the lowest percentage of the population covered. To increase participation in this region, more clients may be dispatched and advertising for educational programs like the Impact Insurance Academy can be directed towards central African countries.